Thursday, May 17, 2007

MEMC (NYSE:WFR): Comments on buyback

- CIBC comments on MEMC (NYSE:WFR) after the co announced a much-anticipated share repurchase program for up to $500M of outstanding stock, though timing has not been disclosed.

Firm notes this is a definite positive for the shares, as investors have been anxiously awaiting a productive use of the ever-growing cash balance. At an avg. price of $60/share, the program would reduce share count by 8.33M shares, which if completed in 2008 would increase EPS estimate by $0.15, to $4.28 from $4.13. Based on CIBC's 19x target multiple, this could raise the calculated fair value of the shares by nearly $3, to $81. In the past 4 quarters, WFR has generated $457M of FCF, providing nearly all of the required funds for the share repurchase.